The evolving role and definition of the federal funds rate in the conduct of U.S. monetary policy
AbstractOver the past twenty years, the federal funds rate has evolved from being an intermediate target or indicator variable in discussions of monetary policy to the Federal Reserve’s (exogenous) policy instrument. How the funds rate is characterized has important implications for modeling, particularly in settings such as the popular Taylor Rule. Crucially, however, little investigation has been done to examine whether the funds rate meets the conditions one would require for an instrument of policy. This paper offers empirical evidence on the relationships among the federal funds rate, variables that might influence its behavior and variables of interest to monetary policy.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18970.
Date of creation: Apr 2009
Date of revision: Aug 2009
federal funds rate; monetary policy; causality tests; reserves;
Find related papers by JEL classification:
- E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-11 (All new papers)
- NEP-CBA-2009-12-11 (Central Banking)
- NEP-MAC-2009-12-11 (Macroeconomics)
- NEP-MON-2009-12-11 (Monetary Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- There is nothing âunconventionalâ about money base control
by Lars Christensen in The Market Monetarist on 2013-11-30 09:06:27
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